Jobs figures fail to lift sterling versus euro

Stronger-than-forecast employment data failed to give a definitive lift to sterling in the aftermath of Tuesday´s inflation report.

Official figures showed the UK economy added another 122,000 jobs in March, significantly beating expectations. UK unemployment fell to 4.6% from 4.7%, its lowest level in 42 years.

Under pressure

The news served to provide some support for the pound, which had come under pressure following Tuesday´s inflation report. UK inflation rose to 2.7% in April versus 2.3% for the prior month.

Sterling appeared on course to lose further ground against the euro following Tuesday´s weakness.

Sterling was on course to lose more ground against the euro.

Brexit slowdown?

Despite the oft-lauded fears of an imminent Brexit-related slowdown, the latest jobs figures indicate that the UK economy remains in expansion mode.

While this should be good news for the UK government as it prepares to fight a general election on 8 June, there is reason for caution. Data released today also showed average weekly earnings excluding bonuses were lagging inflation in the three months to the end of March.

Sterling remains relatively volatile; it has become dominated by political events in the aftermath of the shock Brexit vote, which led to a sharp sell-off last year.

At the same time, the pound was also bruised by yesterday´s inflation report, as it slipped to a five-week low against the euro.

Shares

The large number of companies listed on the UK market with revenues and earnings coming from overseas means that UK stocks tend to benefit when the pound weakens. Big UK-based names such as British American Tobacco are among the key beneficiaries of sterling weakness since the Brexit vote in June 2016.

Big UK stocks have benefited from sterling weakness.

Euro strength

While the pound was down by around 0.2% against the euro in afternoon trade, sterling made gains against the dollar. The latter sold off after fresh political controversy engulfed the Trump administration.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74.8% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Please read our Risk Disclosure statement.

Risk warning: transactions with non-deliverable over-the-counter instruments are a risky activity and can bring not only profit but also losses. The size of the potential loss is limited to the size of the deposit. Past profits do not guarantee future profits. Use the training services of our company to understand the risks before you start operations.

Capital Com (UK) Limited is registered in England and Wales with company registration number 10506220. Authorised and regulated by the Financial Conduct Authority (FCA), under register number 793714.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74.8% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.